What is the primary possible cause of inventory variances?

The primary possible cause of inventory variances is theft. When items within inventory are stolen, it directly impacts the financial records and physical counts, leading to discrepancies between what is recorded and what is actually available. This discrepancy results in variances that need to be accounted for, affecting inventory management and financial reporting.

While miscounting can certainly lead to variances, it is often a result of human error rather than an intention to steal. Damage during transport is usually a more predictable issue that can be accounted for in inventory management practices. Supplier errors might also lead to inventory discrepancies, but they primarily affect the accuracy of orders rather than the physical count of inventory on hand. Therefore, theft stands out as a significant and often unexpected cause of variances in inventory levels.